Russia drops gas pipeline plan

Dec 02, 2014, 5:00 AM EST
Turkish President Recep Tayyip Erdogan (L) and Russian President Vladimir Putin (R) walk past a guard of honor during the welcoming ceremony at Turkey's Presidential Palace in Ankara, Turkey on December 1, 2014.
AFP/Getty Images

Russian President Vladimir Putin says the proposed South Stream gas pipeline will not go ahead. The BBC writes:

Speaking on a visit to Turkey, he said Russia would instead look at creating a gas hub on the Turkish-Greek border.

Mr Putin blamed European opposition to the South Stream plan, which was funded by Russia's state gas giant Gazprom. The pipeline was to have run under the Black Sea to southern and central Europe, providing another transit route for Gazprom.

But the EU has been worried about the gas producer also owning a pipe network. Construction work on the 930km (580-mile) South Stream project began in Bulgaria in October 2013 but was suspended in June after the European Commission said it may be breaking EU competition rules.

Putin accused the EU of denying Bulgaria, heavily dependent on Russian gas, its sovereign rights, and said that blocking the project "is against Europe's economic interests and is causing damage". Reuters reports:

He announced that Russia would grant Turkey a 6 percent discount on its gas imports from Russia for next year, supplying it with 3 bcm more than this year. Miller said Gazprom had signed a memorandum of understanding with Turkey's Botas on the pipeline under the Black Sea to Turkey.

But the plan remains at an early stage. Russian Energy Minister Alexander Novak said that "energy ministers and companies (on both sides) were ordered to look into these proposals in detail ... It is hard to assess the costs, financial mechanisms, terms of fulfilment for now."

He also said Turkey was seeking a 15 percent discount for Russian gas.